HOTEL BANJARA LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) In this reference case the assessee is carrying on 'hotel business'. It claimed investment allowance under s. 32A of the IT Act, 1961, for short "the Act". The ITO negatived the claim of investment allowance on the ground that 'hotel business' could not be treated as in industrial concern which was manufacturing an article or thing. The assessee carried the matter in appeal before the CIT(A). The appellate authority took the view that the assessee was not entitled to investment allowance under s. 32A of the Act. He also opined that there was no manufacturing or processing activity and accordingly dismissed the appeal. Against the order of the first appellate authority two appeals were filed, one by the assessee and the other by the assessing authority. Those two appeals were disposed of by a common order dt. 18th Feb., 1986. On the applications of the assessee as well as the Revenue, under s. 256(1) of the Act, the following questions are referred to this Court for opinion :

(2.) Mr. Y. Ratnakar, the learned counsel for the assessee contends that 'hotel' is 'plant' so far as the business of the assessee is concerned both for purposes of s. 32A of the Act as well as s. 43(3) of the Act, therefore the Tribunal ought to have granted the relief under the said provisions.

(3.) The learned standing counsel for the IT Department, has contended that 'hotel' is mere a building and it cannot be treated as 'plant', wherever the Parliament intended to grant relief to a 'hotel' it included the word 'hotel' for purposes of granting relief, so where the word 'plant' is used, the assessee cannot bring in 'hotel' within the concept of 'plant'. He further contended that after amendment of the IT Act, 1961 w.e.f. 2/04/1987 new classification has been introduced by the Parliament classifying 'hotel' under 'building' and that would also give an indication that the Parliament never intended 'hotel' to be brought within the meaning of 'plant'.